3 Airline Stocks Taking Flight

Some Airlines Will Return To Profitability Sooner Than Others

The global airline industry saw its worst year ever in 2020. Because of the coronavirus pandemic, passenger volumes plummeted 60%.

In 2021, airlines were put into recovery mode by vaccinations and relaxed government restrictions. Passenger volumes, on the other hand, are expected to have been far lower than before the pandemic.

In 2022, the skies appear to be a little more friendly. Despite expected growth of global air travel to 61% of 2019 levels, industrywide losses are anticipated to come down from $52 billion in 2017 to around $12 billion in 2022.

On the basis of their excellent cost-cutting strategies, strong balance sheets, and popular route choices, some airlines will return to profitability sooner than others. Here are three airlines that are poised to take off faster—and whose stock prices are worth booking a reservation.

The Best U.S. Airline Stock

Southwest Airlines (NYSE: LUV) is one of the most well-managed airlines in the world. Its low fares have made it a popular choice with passengers, and its low-cost income statement has attracted investors' interest.

In April 2021, Southwest stock surpassed its pre-pandemic peak and came close to the $66.99 split adjusted record high. Now valued at around $40 per share, shareholders have the chance to acquire a solid company that is poised to recover faster than its competition.

Southwest is the world's largest single-aisle airline, serving more than 100 domestic stations and 10 overseas cities. Its target market is the leisure traveler sector, which is recognized to be a major source of pent-up demand. With improved travel conditions, passengers will surely flock to Southwest's inexpensive fares and renowned getaways, as they have in the past.

The company's balance sheet is in excellent shape, as it has been for years. $17 billion in liquidity and a manageable level of debt are on the books. When competitors like American Airlines continue to lose money through 2022, Southwest is expected to return to profit in 2022. Southwest Airlines stock is priced at 25 times forward earnings, based on analysts' expectations for this year's performance. This is a fair price to pay for an airline that will lead the pack as business prospects improve.

A Good International Airline Stock

Ryanair Holdings plc (NASDAQ: RYAAY) is an Irish ADR. The airline's two major hubs are Dublin and London, however it flies from 86 different bases across Europe and has operations in more than 200 airports all around the world.

As the Southwest of Europe, Ryanair is a low-cost airline that can be compared to the low-cost carrier in the United States. It also has a strong investment-grade balance sheet, which puts it in position to outperform over the next few years.

Lately, Ryanair's passenger numbers have been increasing, but they are still behind 2019. With over 80% of Europe's adult population vaccinated, December 2021 traffic increased to 9.5 million people and 81% of available capacity was utilized. Due to Omicron developments, however, the outlook for 2021 has been reduced to "just under 100 million passengers" as a result of the surge, according to a filing. Ryanair also said that in the post-Covid era, growth will be faster.

By 2026, Ryanair plans on welcoming 225 million passengers to its network. This is an ambitious but achievable goal. With demand increasing, Ryanair's low-cost business model should help it become one of the main beneficiaries of pent-up demand. Analysts expect a rapid return to profitability in fiscal 2023 and a smoother ride from there. At 17x next year’s earnings, Ryanair stock is one of the most appealing ways to play the airline industry recovery.

Another Good Airline Stock

Back at home, Hawaiian Holdings stock (NASDAQ:HA) is another airline stock that deserves a place in your portfolio. Despite the fact that profits will not return until calendar year 2023, boarding now while it is selling for less than $20 appears to be a smart decision.

Hawaiian Airlines is a subsidiary of the corporation. It is the biggest airline to and from the West Coast and Hawaii. It also charters flights that connect the Hawaiian Islands. Given where it operates, the airline is highly reliant on Hawaiian tourism.

The tropical state has been slow to reopen to tourists, understandably so. Passengers are up significantly over 2020, but they are still far below 2019 levels.  Last year, it filled 76 percent of its seats and booked more than 10 times the income it did in 2020, however higher fuel expenses weighed on profits. Passenger revenues are anticipated to rise year-over-year in 2022, but significantly below pandemic levels as tourism continues to recover.

The good news is that Hawaiian Airlines doesn't have a demand problem, and it serves one of the most popular leisure destinations. As a result, it has been boosting its network in recent years, launching a non-stop service between Austin, Texas, and Hawaii.

Hawaiian Airlines is one of the most customer-friendly airlines in the United States, having been named Most On-Time Airline for 17 consecutive years. From a financial standpoint, the company's billion in cash and little debt puts it in a great position to weather future storms and emerge one of the world's strongest airlines after the pandemic is over.

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